The Lifestyle Of A Professional Forex Trader
At one point I thought that professional currency traders had the one of the best jobs in the world. They get to wake up around the same time other businessmen do, but when they wake up they grab a cup of coffee and head to their computers. They spend a couple hours trading the forex market, and then around lunch time they call it a day. They also seem to make more money than most people do, so it sounds like a pretty neat job doesn’t it? Well it’s not as sugar coated as all of us forex trading newbies think.
What professional forex traders actually do is get up around 5 in the morning, depending on where you live, and that is when the workday starts. What happens then is they spend the next 8 hours sitting in front of their computer closely monitoring the market. They can leave at certain points, but most of the time they must be on the watch for trades that might come into play. Also one of the big things is financial news. There seems to be financial news that is coming out at all hours of the day, and forex traders must be aware of what is being released, at what time it’s being released, the expected data of the release, how it will affect their trade either way, and how they should react to it in the events of different scenarios. As you can see, the life of a professional forex trader is not all fun and games.
There are also some other downfalls that these professionals have. One of these is that they must always be monitoring their open trades. For example, most of them check up on their trading accounts at night before they go to bed. If they are out of the house then they must check their accounts from their phones.
With all of this said, we must also bare in mind that it is not quite as bad as I made it out to be. If they decide that they want to take a day off from work one day, than they can. Since they are pretty much their own boss, they can take off an entire unexpected week and not have to answer to anyone about it. They can also end their work day early without any trouble too.
One thing some of these professionals do is they have a forex robot trade for them in a separate account. A forex robot is not something that you could easily make a full time income off of, but they allow many traders some extra money week after week. If you don’t know what a forex robot is, then some good articles to check out are the auto forex trader, best forex automated software, and automated forex trading review
How to Make Money Trading Currency
You can make big money online, more specifically you can make money trading currency IF you follow some simple rules. Break these rules and you will be a loser with a capital L, but follow them and you don’t need a college degree in rocket science to be a winner and full time 4x trader like me.
The first rule might sound obvious and stupid to even point out, but the first rule to make money trading currency is DON’T LOSE ANY. Yes, it sounds silly, but far too many forex traders forget this fundamental rule.
If you study success (success at anything), then one of the main principles taught by success teachers is to “study failure, and then don’t do those things”. This is very important! You will make a lot more money trading currencies IF you stop losing money.
My favorite currency pair is the EURUSD. An old habit if you will, but let me use the EURUSD h1 (1 hour chart) as an example. You wake in the morning to see a massive plunge (or rise, I don’t care) of say 160 pips. Things have been flat for an hour or four. It doesn’t matter. A rebound is what does matter, that’s your thinking as you wipe the sleep from your eyes.
There are trends and there are dips in the forex markets. After a huge drop in a currency it is normal and typical that there be a large rebound in the price. Also true is that just before that rebound there is almost always a dip first, then the powerful rebound. On the other end of every trade we all make there is another 4x market maker. Even though we don’t know or even care who he is, we are here in the market to take his money from him. Silly him to play against us. We buy on a further dip and then we take him for all he can handle losing.
But on the basis of NOT LOSING MONEY, I also cover my butt by also putting in place an equal trade size of Sell Stop at the same or near same price. That is, I put in place 2 pending orders that carry/equal/cancel out each other. Two things can now happen, either the currency pair completely falls out of bed, in which case my short position is in the money, or I was right about the bounce and my long position is in profit. Of course the other trade executed at the same time cancels out any profits.
With proper use of stop losses (I won’t go into detail about this here), what ever happens will happen, and shortly thereafter one of the trades will close out at a (small) loss but in fact I have lost no money because the opposite trade is in profit to that level.
This trade set up and entry is very safe. It gives a great opportunity to make money trading currency with no likely downside. It allows you to do 2 minutes work, then leave the computer for several hours to come back and find out what happened.
This matter of not losing money however raises the issue of correct money management. Never, and I do mean NEVER have more than 2% of your capital at risk in a trade. And stop trading entirely for the day if you have lost a total of 10% of your capital in the same day.
On a $10,000 account trading single lots, then 2% is $200 or a stop loss of 20 pips. If I get stopped out, then I have $9,800 left, and 2% of that is $196 – or 19 pips. That is, the dollar amount of your next maximum risk gets smaller and smaller with each loss.
If I do this then I can never bust my account. If I lose $200 by being stopped out, then I have $9,800 left. And a 2% maximum risk for the next trade based on one full lot trade forces me to put my stop at 19 pips. If I lose again, then I have $9,610 left, and can go another trade with a 19 pip, 2% stop. As my trades continue to fail, my stops get smaller pips set, or my trades get smaller lot sizes.
OK, next point – walk away if you lose 10% in a day. I can’t remember the last time this happened to me, but it is a rule I will always follow. The simple fact is that some days you just cannot put a foot right. Everything you do just crosses over everything you know and costs you money. Based on never risking more than 2% a trade, walking away if you lose 10% in a day gives you 6 consecutive loses in a row before you close your trading for the day.
Summary on how to make money trading currency: Rule 1, don’t lose money. Rule 2, don’t risk more than 2% on a trade. Rule 3, quit the day if you lose 10% of your account.
Phil Jarvie is a very experienced forex trader and sees profits where others lose. It could be worth your while to visit his FREE website where he talks about money trading currency and make money with automated trading robots